يونسلا ريرقتلا 2013 - astra industrial · fax: + 966 11 4752001...

التقرير السنوي

2013

Call Us:P.O. Box: 1560 Riyadh 11441 Kingdom Saudi ArabiaTel: + 966 11 4752002Fax: + 966 11 [email protected]

www.astraindustries.com.sa

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Astra Energyشركة أسترا للطاقة

Astra Industries

Board of Directors

Chairman’s Message

President’s Message

Financial Snapshot

Tabuk Pharmaceutical Manufacturing Co. (TPMC)

Astra Polymers Compounding Co.

International Building Systems Factory Co. Ltd. (IBSF)

Astra Industrial Complex Co. Ltd. (Astrachem)

Al Tanmiya for Steel Industries

Astra Mining

Astra Energy

Audited Financial statements for 2013

Contacts

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Astra Industrial Group “Astra Industries”

Astra Industries establish in 2006, Astra industries is one of the leading in-dustrial conglomerates in the Kingdom of Saudi Arabia, with all its subsid-iaries that are focused on innovation and creativity, as well as having a keen eye on achieving quality, through assuring effective operational, financial and managerial monitoring.

As the Group believes that industrial variety leads to a balanced and sustain-able performance, its subsidiaries are engaged in the key industrial segments of pharmaceuticals, Steel industries, Specialty chemicals and mining.Astra Group has presence’s areas in the Middle East and North Africa Re-gion, as well as other countries like Turkey, Uzbekistan and Ukraine. This network facilitates to a great extent the propagation of the Group and its products in regional and international markets, and enhances the experience the Group has so far acquired on both local and international levels; which has a salient effect on the growth of sales and high profit rates. It also en-hances the maintenance of an effective share in the local and Gulf markets and other neighboring countries.

Astra Industries had managed to plan a strategy that encompasses long and short term plans. These plans enabled expansion on both local and interna-tional levels, products development and diversification. They also allowed products access to the Middle East, North Africa and some European and Asian countries. Thus, they contribute to supporting and developing the Saudi national economy.

The Group is committed to achieving an economic development through highly valuable products and remarkable services offered by its subsidiaries. This value rests upon focusing on the results and benefiting from its resourc-es in the most effective way to always achieve the best results. Moral criteria is the road taken to communicate with clients, partners, and other concerned parties in the most respectful and honest manner.The vision for Astra Industries is clear through its assiduous attempts to pio-neer industrial investments in the Middle East and North Africa and other countries. This is done by utilizing of the developed technologies, programs and initiatives.

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Astra Industries seeks perpetual develop-ment through its responsible leadership and its focus on the necessity of achiev-ing its goals. It, therefore, improves its performance constantly and is committed to achieving quality and offering remark-ably good quality products and services that enhances its distinct position. This is done by means of conforming continu-ously to clients’ expectations.

In order to pursue its goals and keep up with the success it has achieved so far, Astra Industries is keen on drawing tal-ents and competences. It enables them to perform their tasks and responsibili-ties in the best way possible. Thus, they become fully responsible for the results they are entrusted with. It attracts highly talented employees and empowers them to perform their duties and responsibili-ties to their fullest potential in research, development, production marketing and managing administrative and financial affairs.

Astra Industries values its factories as much as it does to its human capital. It is keen on having its factories fully equipped with the most advanced tools, production means and developed labo-ratories to support research process and products development. This enables it to encounter the challenges and circum-stances with absolute readiness.

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Board of Directors

Sitting from the right: Ghiath Muneer Sukhitan, Sabih Taher Al Masri, Kameel Abdulrahman SadeddinStanding from the right: Sameer Mohammad Al Hamaidi, Mohammad Nejr Al Utaibi, Farraj Mansour Abuthnain, Khaled Sabih Al Masri, Ghassan Ibrahim Akeel, Selman Fares Al Fares

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Sabih Taher Al MasriChairman of the Board

Chairman of Nominations &

Remunerations Committee

Sameer Mohammad Al HamaidiBoard Member

Member in the Audit Committee

Member of the Nominations &


Khaled Sabih Al MasriDeputy Chairman of the Board

Chairman of Performance &

Investment Committee

Farraj Mansour AbuthnainBoard Member

Member of Performance &


Mohammad Nejr Al Utaibi Board Member



Khaled Abdulrahman Al GwaizPresident of the Group

(Until November 2013)

Ghiath Muneer SukhitanBoard Member

Mohammad AbdullahAl HagbaniPresident of the Group

(Since January 2014)

Ghassan Ibrahim Akeel Board Member

Chairmanof the Audit Committee


Investment Committee.

Bader Ibrahim Al Mohareb VP Finance

(Until May 2013)

Selman Fares Al FaresBoard Member

Member of the Audit Committee

Chairman of the Nominations &


Ali Moussa Al Jabrah(VP Finance –since June 2013)

Acting VP Shared Services

Kameel Abdulrahman SadeddinBoard Member



Samer Samir HindawiVP Investment

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Sabih Taher Al MasriChairman

Dear Shareholders,

Peace and Allah’s Mercy and Blessings upon you. On behalf of the Board of Directors, it is our pleasure to present you the annual report about the Group’s performance and achievements for the financial year ended on December 31st, 2013. It presents the continuous improvement in the company’s perfor-mance, itsactivities and its investments inside Saudi Arabia and abroad.

It also reveals the Astra Industries role in develop-ing the industrial sector in Saudi Arabia and its role in enhancing the national economy by delivering long-term stakeholder value through profitable and sustainable growth.

The key objective of Astra Industries holding com-pany, which encompasses several industrial com-panies, stress the fulfillment of its strategy that is based on local and regional expansion on the field of pharmaceuticals, chemicals and steel industries. It attempts to achieve its role that contributes to the development of the national economy and utilizing the international knowledge and technology in order to indigenize in the local industry.

Astra is responsible for developing and diversifying the industrial investment to fulfill the needs of the local market.

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It provides the basis for the developmen-tal projects proposed by the national devel-opmental plans; leading to the reduction of imports in addition to enhancing national exports. Another result is delivering the best quality products and services by differentiat-ing ourselves from our international compet-itors in terms of quality or price. This allows Astra to expand and offer job opportunities to highly talented employees. The group has so far performed its job professionally and skill-fully in a way that makes us at Astra Indus-tries proud of these young talents.

Astra Industries realizes the amount of chal-lenges that are still encountered by the eco-nomical and investment sectors both locally and internationally. However, we keep on working and being productive while being inspired by the solid national economy on which we all rely in our expansionist targets. Despite these challenges, Astra was able to achieve diverse successes. They are rep-resented in expanding some of its factories and adding new production lines in order to increase the production rates, in addition to acquiring new shares in already existing fac-tories.

Thanks to Almighty Allah, Astra Industries profit rate increased with a value of (4%) compared to the last year (2012). Moreover, on 2013 the share price of Astra Industries reached the highest value since it was listed in stock market during August 2008. Thus, we affirm our commitment to qual-ity criteria; expanding and diversifying our products will always be our motto. We have sworn to cope with different phases of devel-opment and keep working according to the best criteria. This makes us aware of our responsibilities as an organization enriching the industrial reality and facilitating work at its different sectors.

On behalf of the Board of Directors, I would like to thank all our employees and our man-agement team for their dedication, as well as our partner in the private and government sector for their ongoing support, and all our shareholders for their trust and confidence in our vision.

Thank You

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Mohammad Al HagbaniPresident

Dear Shareholders,

Astra Industries is proud of becoming one of the leading contributors in the national indus-trial development; due to the successes that has achieved over the past years.

Astra Industries’ business performance picked up significantly during 2013 with record sales of SR 1.8 billion compared to SR 1.5 billion in 2012, an increase of SR 275 million or 18%. Meanwhile, we achieved net profits of SR 253 million compared to SR 243 million in 2012, up SR 10 million or 4%. By the end of 2013, the share price was 53 riyals whereas its earn-ings per share is SR 3.42 compared to SR 2.27 in 2012.

Overall, strong growth in market sales in phar-maceuticals, energy and steel industries, enabled the Group to reach its highest level in five years. Additionally, the increase in profit, compared to the last year, can be attributed to the increase in sales in all sectors and other income sources.

These results reflect the progress and develop-ment achieved by the Group. The implementa-tion of investment plans concerned with sup-porting manufacturing and production processes in its subsidiaries, the Group’s commitment to quality and international standards and expand-ing the service and distribution centers facili-tated the Group’s access to the Middle Eastern markets which are known for their rigid criteria and competitiveness.

Astra Industries maintained its expansion plans during 2013. The new Tabuk pharmaceuticals factory in Dammam will be ready for trail pro-duction of medical injections and other pro-ductions after completion of construction. This provides an additional energy to support Tabuk

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city’s factory to fulfill the demand for other products unlike injections. The expansion expected to be completed in the second half of 2014. Concerning Al Tanmiya the steel company in Iraq, the experimental operation for the steel mill in Basra has already final-ized, and the commercial production started on December 10th, 2013.

Astrachem has completed the construction of a leading factory in the Eastern Region in Saudi Arabia for manufacturing soluble granular fertilizers that are chemically for-mulated.

The Group is using the advanced technolo-gies that enable the holding company to in-tegrate and connect its subsidiaries in and outside Saudi Arabia, it has invested in its infrastructure by implementing (SAP) sys-tem. Such techniques aim to enhance plan-ning, administration, selling, production, generating reports and auditing processes. The company has developed a site outside Riyadh to strengthen the already established network with sufficient technical specifica-tions that aim at exchanging and storing in-formation inside Saudi Arabia or abroad, in a manner that guarantees the continuity of work at times of emergencies and disasters.

As a part of Astra’s commitments to the so-ciety, it succeeded in compatibility with the labor law and regulations through maintain-ing Saudization in its subsidiaries. It works hard to attract the talents and allow the ap-propriate conditions to support, qualify and train and make them play active roles across all levels of organization. In addition, it still supports female’s participation in soci-ety development and national economy by availing employment opportunities in dif-

ferent functions and enhancing the female environment. Owing to its social responsibility towards both the individual and society, Astra In-dustries is keen on supporting different social events and activities. This include supporting the institutions that care for special needs individuals, their education and helping graduate students to complete their graduation research projects. Astra Industries pays its utmost efforts as well to make the public aware of chronic diseases. An example was the efforts exerted by Ta-buk Pharmaceuticals and its participation in the International Day for Diabetes in 2013. This is in addition to the group’s support for the charitable organization concerned with (Down Syndrome) and the other concerned with motor handicap for adults.

Finally, we are certain that through our as-siduous efforts, Astra Industries will become a leading company in the industrial invest-ment in both the Middle East and North Af-rica. This will be done by means of employ-ing appropriate investments or contributing to the development of companies within the group and providing them with the best available financial and managerial re-sources. Despite the challenges, I am certain that, with Allah’s support, we will be able to achieve our goal.

I would like to thank our staff for their per-formance that contributed to the remarkable achievement of our group and the increase of its profits. I would also like to thank our honored clients for their trust and the sup-pliers of supporting services in both govern-mental and private sectors. Our thanks ex-tend to the board and shareholders as well who are the cornerstones of our success.

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Year 2009 2010 2011 2012 2013

Total no. of Assets 2،075 2،889 2،963 3،583 3،646

Total Shareholder’s Equity 1،626 1،745 1،833 1،857 1،879

Local Sales versus Export Sales, Five Years Trend:

Total Assets versus Total Shareholder’s Equity, 5 Years Trends (SR Millions):

Exports

Total Assets

Local Sales

Total Shareholder’s Equity

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2013

Year 2009 2010 2011 2012 2013

Sales 1،042 1،121 1،382 1،496 1،771

Net Profit 204 259 248 243 253

Net Profit

85

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-1-1

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Sales

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Segmental Revenue and Net Profit Distribution for 2013

Net Profit and Revenue, Five Years Trend (SR Millions):

Specialty Chemicals

Sales

Specialty Chemicals Pharmaceutical Pharmaceutical

Power & Steel Industries

Net Profit

Holding Company&others Power & Steel Industries

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2005 - 1979

2006

2008

2009

2010

2011

2012

2013

Our Achievements: Historical Overview

Raised the ownership rate in Nova Company to 92.4% Started the commercial operation of Al – Anmaa Factory in Iraq. (Part of Al- Tanmiya company) Started the commercial production of Astra Energy Ltd. Started the commercial production of the expansion of Astrachem for granular fertilizers.

Started the commercial production in the expansion of Tabuk Factory in Sudan. Increased the Group stock of ownership in the Sudanese Factory of TPMC to 100%. Started the commercial production of the Astra Nova Factory in Turkey.

Integrated the whole group through the technological information system SAP. Increased the shares of Astra Industries in Astra Nova company in Turkey to 67% Commenced the operation of the new factory for Astra Polymers in Rabegh.

Acquired 51% of the shares of Astra Nova-Turkey. Acquired 80% of the shares of Sigmatau Pharmaceuticals in Sudan. Sold 100% of the Arabian Company for Comforters and Pillows. Acquired 100% of the shares of Constab Middle East Polymers – Turkey.

Acquired51% of Al – Tanmiya for Steel Industries in Iraq. Signed the official MOU for establishing of Astra Mining.

Listed the Group to the Saudi capital market, floating 30% of the shares to the public.

Astra Industrial Group was founded post reorganizing of certain industrial investments of the Group.

Astra Group

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India

UkraineUzbekistan

GCC

Turkey

IraqJordan

Saudi Arabia

Algeria

Egypt

Sudan

Morocco

Tabuk Pharmaceuticals was established in Tabuk, Saudi Arabia in 1994. It is a pioneering pharmaceuticals company that is owned by private sector.

Tabuk Pharmaceuticals Manufacturing Co.

(TPMC)(A leading Pharmaceuticals Company)

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Tabuk Pharmaceuticals’ activities are mainly con-centrated in the Middle East and North Africa. It is engaged mainly in developing, manufacturing, marketing, distributing branded generic pharma-ceuticals and licensed products in the kingdom and abroad. Tabuk distributes its products in 25 countries all over the world, in addition to representing interna-tional companies specialized in pharmaceuticals, cosmetics, medical equipment and nutritional sup-plements.Tabuk factories are located in Saudi Arabia, spe-cifically in Tabuk and Dammam, in addition to the company’s factory in Sudan. Dammam factory will be inaugurated soon, it will be specialized in pro-ducing injections. It is expected to be ready for op-eration during the second half of 2014.Tabuk Pharmaceuticals has strengthened its pres-ence through managing several products including: Generic products: producing high standard ge-

neric drugs, of similar quality to their originators. Licensed Products: collaborating with multina-

tional companies through licensing vital drugs Agency Products: through registering, marketing

and distributing variety of health products and cos-metics.Tabuk Pharmaceuticals is engaged in many thera-peutic categories such as: cardiovascular diseases, arthritis, neurological disorders, central nervous

system diseases and respiratory diseases. Tabuk Pharmaceuticals works hard to improve its operational potentials and expand its technical in-frastructure in the Middle East. it pays much effort to establish new factories and warehouses in Saudi Arabia, as well as other countries in the Middle East.Tabuk Pharmaceuticals has enhanced its existence in the region through building partnerships with multinational companies. It obtained licenses for manufacturing vital medicines. It has also imple-mented an ambitious plan for perpetual training and innovation for its employees, who exceed 1,900 all over the different countries. The company is keen on implementing quality administrative systems that are designed to cope with the requirements of the Saudi Food and Drug Authority and other international criteria and stan-dardized regulations. It also applies one of the best Enterprise Resources Planning Systems to enhance the integration of processes and guarantee their ef-fectiveness. As a matter of fact, it is the first firm in Saudi Arabia to obtain the European Certificate for Quality of Medicine Manufacturing (EU-GMP). Moreover, its factory has obtained the license of the Gulf Cooperation Council (GCC). As for its social responsibilities, the subsidiary has numerous contributions; which are mainly based on strategic relations rather than charity donations

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only. Thus, Tabuk administered an ambitious plan to become an active participant in enhanc-ing the health awareness for patients in the Middle East. Within this context the subsidiary focuses on making people in the Middle East aware of cardiovascular diseases, diabetes and asthma. It participated in the activities held on the In-ternational Day for Diabetes and the Interna-tional Day for Asthma in 2014. Moreover, it launched initiatives to improve knowledge and transfer skills to physicians in the Middle East and North Africa. This is one of Tabuk’s social responsibilities. It has actually started offering a program for academic intellectual communi-cation for cardiovascular diseases in 2012. It is planning to undergo continuous expansion so that it will encompass other medical treat-ments.Although the Saudi Market is highly competi-tive, where a great deal of national and inter-national companies are active in the field of manufacturing and marketing pharmaceuticals, Tabuk Pharmaceuticals has obtained the third rank among the most productive and marketing companies for pharmaceuticals in Saudi Arabia during 2013.

Established in 1993. Astra Polymers a well reputed company in the regional market, it is producing high-quality Masterbatch (Black, White, and Color), and Dust Free Additive Systems together with custom-made Thermoplastic Compounds plus liquid based or paste colorants and custom compounding for the Polymer Manufacturing, Polymer Converting, Petrochemical and Plastics Processing Industries. It has dominant market share in KSA and UAE.

Astra Polymers Compounding Co.

(Astra Polymers) (A leading company in the production of high-quality Masterbatch)

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Astra Polymers has production platforms in several countries. In Saudi Arabia for example, where started in 1993, its factories are sited in Dammam and Rabigh. In 2001, Astra Poly-mers was established in the United Arab Emir-ates where the factory is located in Jabal Ali Free Zone, was built in 2004. In Turkey, Astra Polymers acquired “Constab Polymers – Middle East” in 2010; which enhanced Polymer’s posi-tion both in Turkey and the European markets. The company has also made final modifications to the designs that are to be used to construct a new factory in India. This factory is expected to commence operations by the end of 2015. The productive capacity of this factory is 16,000 tons per annum.Astra Polymers factory in Rabigh is one of the most progressive master batch factories with high production capacity.. It employs latest equipment and integration techniques; adding more strength to Astra Polymers vision in lead-ing Masterbatch & compounding manufacturer globally. Astra Polymers success in the field of Petro-chemicals is due to its deep understanding and

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appreciation of the needs of this major industry; which requires high technol-ogy and high quality equipment. Addi-tionally, it requires skills, sophisticated knowledge and commitment to fulfill the industry’s obligations. Over the past twenty years, Astra Poly-mers is regarded as a highly reliable pro-ducer maintaining high quality products and serving markets in the Middle East and abroad, due to its developed facto-ries, utilization of digital technologies, reliance on remarkable labor force and highly equipped laboratories and perpet-ual research.Its well-recognized reputation and efforts in developing new products and technol-ogy to enhance the master batch markets, enabled Astra Polymers to obtain the ISO certificate and currently, it follows the 2008: 9001 ISO System for managing quality in all its industrial sites. It is also completely committed to the practice of health safety and environment (HSE) and the requirements of the clients who have petrochemical activities.


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Established in 1993. It operates in Saudi Arabia. IBSF’s main activities include designing, manufacturing and erecting pre-engineered steel buildings and steel structures of high-rise, airport halls, oil and gas companies, the petrochemical industry as well as heavy industries such as steel, cement, power generation and desalination plants.

International Building System Factory Co.

Ltd. (IBSF)(It has produced more than 10,000 building within 36 countries around the world)

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Through its three factories in the industrial city in Riyadh and the one in Jubail, IBSF also produces sandwich panels, isolated sheets and panels for industrial buildings. The company has introduced a wide range of building accessories including energy- efficient flooring systems, mezzanine, decorative walls, canopies, crane systems, cladding, curtains and fasciae. The com-pany also produces a wide range of doors, windows, ventilators and related accesso-ries. Moreover, the factory is remarkable for its unique aesthetic designs such as manufac-turing sheets that has non- apparent fixa-tions and has a harmonious appearance and weather resistant. The factory provides other supplementary services according to the clients’ requirements in the fields of construction, installation, civil works and project management. It provides technical consultation, design services, manufactur-ing steel structures, total engineering solu-tions and other relative services. It has pro-duced more than 10,000 buildings within 36 countries all over the world. It still as-pires for more progress and success.

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Although IBSf’s industrial operations are based in Saudi Arabia, its activities extend to the Gulf Countries and other countries in the Middle East and North Africa such as Jordan and Iraq and some Asian coun-tries. The International Building System Factory has implemented several impor-tant projects. It has also expanded through establishing several offices to market its products mainly in Saudi Arabia and other Gulf countries. The production of the International Build-ing System Factory encompasses a variety of forms including pre-engineered build-ings, steel structures, communication tow-ers, power generation plants, factories, warehouses and workshops in addition to other products which contribute to the eco-nomic development. IBSF operations observe the most stringent quality control procedures consistent with the latest codes for pre-engineered steel building from such panels as the American Institute of Steel Construction and others. IBSF is also committed to the latest Ameri-can Institute for Steel Construction (AISC), American Welding Society (AWS), Ameri-can Iron and Steel Institute (AISI) and Metal Building Manufacturers Association (MBMA).

Astra Industrial Complex Co. was established in 1996 after two Saudi companies working in the field of agricultural production inputs were merged. These were “Astra Agriculture Ltd.” and “Astra Industrial Compound for Fertilizers and Pesticides Ltd.”

Astra Industrial Complex Co. Ltd.

(Astrachem)( A pioneering company in the agricultural sector)

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Astra Agriculture Ltd. was established in 1988 in Riyadh in Saudi Arabia. Its objective was to import and distrib-ute high-quality products for the agricultural sector in-cluding agrochemicals, fertilizers and pesticides such as pesticides lesions of general health, veterinary medicine, seeds and other agricultural production inputs.The other company Astra Industrial Compound for Fer-tilizers and Pesticides Ltd. was established in 1995. It started investment in a new factory in Dammam to pro-duce compound fertilizers and other agricultural chemi-cals. Later, it was agreed that both companies are to be merged and named as “Astrachem” in 1996.Astrachem Continued to strengthen its position in the local and regional market as a leading company in the agricultural field via a local network for selling and dis-tribution inside Saudi Arabia. Moreover, it has several branches in Middle Eastern and North African countries such as Algeria, Morocco, Jordan, Syria, Egypt, Oman Turkey, Uzbekistan and Ukraine.Export has become an eminent market for the Astrachem representing a relatively high percentage of the total sales. In order to consolidate its potential in foreign mar-kets, the company acquired 51% of a Turkish company specialized in producing agricultural pesticides in 2010 and was renamed as Astra Nova. Meanwhile, the factory was expanded and equipped with update technologies in mid of 2012.Astrachem increased its ownership in Astra Nova to be 92% in 2013.

Astrachem is trying to increase Astra Nova’s exports into Turkey’s neighboring markets. Moreover, Astra Nova started to produce fertilizers after being merged with the Turkish branch of Astrachem.The factory is remarkable for its facilities that are equipped with advanced technologies and equipment that are required to guarantee the continuity of production in a smooth and efficient manner. It also includes developed tools and equipment to secure a safe production process and commitment to accredited scientific specifications and maintaining high quality levels.In 2013, Astrachem finalized the installation of a new production line for granular fertilizers in its Dammam factory. This step aimed at increasing the diversity of products offered by the company into the market and keeping up with the latest improvements in the field of fertilizers’ industry.As part of its concern for environment and its safety, the company applies the criteria stated by the US Environ-ment Protection Agency (US EPA). Astrachem attempts to apply quality standards that are internationally ac-credited such as standards of Food and Agriculture Or-ganization (FAO), Collaborative International Pesticides Analytical Council (CIPAC) and International Fertilizer Development Center (IFDC).The company is considered a comprehensive source for fertilizers, agricultural chemicals and various produc-tions inputs, including: agricultural chemicals, insec-

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ticides and herbicides. It also produces general health pesticides, veterinary medicines, compound fertilizers (which in turn include soluble compound fertilizers, granular fertilizers, single fertilizers, liquid and suspen-sion fertilizers. It also produces internal and external vegetable seeds, soil alternatives, potato seeding and other agricultural production inputs.Throughout its history, the company obtained licenses from several international companies that are special-ized in producing and improving insecticides, such as FMC and Chemtura, according to which Astrachem could produce agricultural chemicals. Astrachem success is due to being keen on recruit-

ing qualified human resources and using research and improvement methodologies in order to obtain im-proved products and compounds in this field. It seeks to improve its products continuously and cope with the changing demands in the agricultural and the health en-vironment sectors. The company has enhanced its production through launching new eight chemical compounds that were introduced to the market in 2013. Its new granular fer-tilizer product is called “Gransole”. The company cur-rently owns almost 82 chemical compounds licensed in its name. It is expected to obtain more licenses during 2014.

Al Tanmiya for Steel Industries owns Al–Anmaa for Construction Materials Production Ltd. in Southern Iraq. Company is engaged in steel melting and producing billets and rebar. The potential production capacity is 430 thousand tons of steel billets which are mainly used to produce steel rebar at the capacity of 300 thousand tons per annum. The factory is equipped with automated machines and equipment along with latest technology.

Al Tanmiya for Steel Industries

(300,000 tons of Steel Rebar)

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Al Tanmiya for Steel Industries has completed the commissioning phase of operation of its factory (Al-Anmaa).Obstacles and hindrances were overcome. Solutions were found for the technical challenges that accompany the emer-gence of a project of such a size. As a result of the experimental operations, commercial operations of the factory began on December 10th, 2013.The company’s factory near Basra’s Port pro-vide a strategic advantage, in terms of import of row material and export of finished good. The steel melting factory is equipped with ad-vanced productive tools, so that it can fulfill the urgent demands for construction material used in reconstructing Iraqi infrastructure. The new factory encompasses a new laboratory, a mod-ern electrical furnace and a continuous casting

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machine. It also includes a water treatment plant, oxygen production unit and a power generation unit. Al-Anmaa was keen on im-porting all the used equipment from well- re-puted European companies.The company works hard to commit itself to the best quality standards and continu-ous enhancement of its products in a way that makes them the most distinguished in the Middle East. Additionally, it focuses on achieving good final outcomes by means of recruiting major managerial and technical efficiencies well known for their expertise. This is to guarantee good operation, produc-tion and handling any unexpected changes that may emerge at the beginning of opera-tion. The total number of employees in the company is approximately 900.

Astra Industries believes that there is significant potential for minerals in KSA in order to position itself in the mining business. Hence, it is establishing factory that is located in Al – Kharj Province in the south of Riyadh, the Saudi capital.

Astra Mining

(An Effective Contribution to Sustainable Development)

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Astra Mining is engaged in exploration for ores and minerals within KSA and to establish factories to process them. Thereby enabling the development of downstream industries in KSA. The company is currently working on carrying out the project of quick lime and hydrated/slacked lime (Calcium Carbonate) in the industrial zone at Al – Kharj. The expected production capacity is99 thousand tons of quick lime and 66 thousand tons of hydrated/slacked lime. Calcium Carbonate is actually used in several industrial fields such as building and construction.The factory experimental operation is expected to begin in the first quarter of 2015. The technology contract was awarded to a Swiss company and the Engi-neering Procurement and Construction (EPC) contact was awarded to a consor-tium of a Swiss company and IBSF.


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Established in 2010. It is specialized in power generation, buying, selling, renting and investing it in various aspects. The operation started in December 2013. Its aim was to supply Al Tanimya for Steel Industries with energy.

Astra Energy

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Astra Energy was established in 2010 in Jordan. It is holding company which engaged in investing in power generation project. Astra Energy is owned by both “Astra Industries” which has 76% and “Al – Massira International Group” which has 24%. The company owns electrical power generators with productive potential up to 70 mega-watts annually.Astra Energy has signed a contract with “Al Tanimya for Steel Industries” to rent power generators for the later. This is in order to provide electrical energy for the Al–Anmaa for Construction Materials Production Ltd.

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CONSOLIDATED FINANCIAL STATEMENTS FORTHE YEAR ENDED DECEMBER 31, 2013 ANDINDEPENDENT AUDITORS’ REPORT

ASTRA INDUSTRIAL GROUP COMPANY(A Saudi Joint Stock Company)

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Pages46

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71-53

Independent auditors’ report

Consolidated balance sheet

Consolidated income statement

Consolidated statement of cash flows

Consolidated statement of changes in shareholders’ equity

Notes to the consolidated financial statements

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Consolidated balance sheet(All amounts in Saudi Riyals unless otherwise stated)

Notes 2013 2012

Current assets

Cash and cash equivalents 4 197,320,536 155,310,007

Murabaha investments - 407,681,759

Accounts receivable, net 5 1,005,706,022 762,451,631

Due from related parties 9 60,669,751 55,108,425

Inventories, net 6 788,177,878 816,463,270

Prepayments and other assets 7 208,706,260 177,723,323

2,260,580,447 2,374,738,415

Non-current assets

Investment in unconsolidated subsidiaries and associates 8 2,315,318 1,996,201

Property, plant and equipment, net 10 1,325,828,587 1,146,789,300

Goodwill 11 44,054,811 44,054,811

Intangible assets, net 12 12,737,519 15,203,881

1,384,936,235 1,208,044,193

Total assets 3,645,516,682 3,582,782,608

Liabilities

Current liabilities

Murabaha and tawaroq facilities 13 943,055,411 1,016,524,253

Notes payable 14 8,995,041 17,582,644

Accounts payable 132,965,967 139,594,996

Due to related parties 9 43,384,726 2,768,687

Accrued and other liabilities 15 198,275,269 168,268,720

Provision for zakat and income tax 16 34,893,270 30,532,513

1,361,569,684 1,375,271,813

Non-current liabilities

Due to related parties 9 329,106,832 286,136,136

End of service benefits 17 75,803,385 64,196,557

Total liabilities 1,766,479,901 1,725,604,506

As at December 31,

Assets

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Notes 2013 2012

Shareholders of the Company:

Share capital 1,18 741,176,470 741,176,470

Statutory reserve 19 406,568,677 406,568,677

Retained earnings 829,734,060 738,034,366

Effect of acquisition transaction with minority interest without change in control

1 (14,338,537) -

Foreign currency translation reserve (68,506,943) (43,366,363)

Changes in fair value of cash flow hedges - (84,240)

Total shareholders› equity 1,894,633,727 1,842,328,910

Minority interest (15,596,946) 14,849,192

Total equity 1,879,036,781 1,857,178,102

Total liabilities and equity 3,645,516,682 3,582,782,608

Contingencies and commitments 26

Consolidated balance sheet(All amounts in Saudi Riyals unless otherwise stated)

The notes on pages 53 to 71 form an integral part of these consolidated financial statements.

As at December 31,

Equity

49

Consolidated income statement(All amounts in Saudi Riyals unless otherwise stated)


Note 2013 2012

Revenues 9 1,771,426,340 1,496,329,255

Cost of revenues 9 (1,087,619,681) (878,403,274)

Gross profit 683,806,659 617,925,981

Operating expenses

Selling and marketing 20 (305,681,582) (236,632,868)

General and administrative 21 (187,240,494) (185,702,491)

Research and development (13,847,950) (10,369,541)

Income from main operations 177,036,633 185,221,081

Other income (expenses)

Share in net income of unconsolidated subsidiaries and associates, net

8 319,117 405,567

Financial charges 13 (28,316,874) (21,094,297)

Other, net 22 62,318,332 49,105,208

Income before minority interest 211,357,208 213,637,559

Loss attributable to minorityinterest 41,780,868 29,033,019

Net income for the year 253,138,076 242,670,578

Earnings per share: 23

Income from main operations 2.39 2.50

Net income for the year 3.42 3.27

Year ended December 31,

50

Note 2013 2012

Cash flows from operating activities

Net income for the year 253,138,076 242,670,578

Adjustments for non-cash items

Depreciation 10 52,627,485 36,273,222

Amortization 12 6,054,029 4,276,527

Gain from sale of property, plant and equipment (256,514) (41,413)

Share in net income of unconsolidated subsidiaries and associates, net 8 (319,117) (405,567)

Loss attributable to minority interest (41,780,868) (29,033,019)

Changes in working capital

Accounts receivable, net (243,254,391) (183,277,776)

Due from related parties (5,561,326) (12,262,748)

Inventories, net 28,285,392 (264,182,377)

Prepayments and other current assets (30,982,937) (88,709,959)

Accounts payable (6,629,029) 36,048,393

Due to related parties 40,616,039 (8,198,376)

Accrued and other current liabilities 30,090,789 15,746,629

Zakat and income tax paid 16 (25,571,743) (35,935,779)

End of service benefits, net 11,606,828 6,344,487

Net cash generated from (utilized in) operating activities 68,062,713 (280,687,178)

Cash flows from investing activities

Murabaha investments 407,681,759 51,425,000

Purchases of property, plant and equipment 10 (236,166,567) (167,390,224)

Proceeds from sale of property, plant and equipment 4,756,309 56,688,809

Purchases of intangible assets 12 (3,739,769) (17,353,763)

Proceeds from sale of intangible assets 152,102 950,510

Net cash generated from (utilized in) investing activities 172,683,834 (75,679,668)

Consolidated statement of cash flows(All amounts in Saudi Riyals unless otherwise stated)


51

Consolidated statement of cash flows(All amounts in Saudi Riyals unless otherwise stated)

Note 2013 2012

Cash flows from financing activities

Murabaha and tawaroq facilities (73,468,842) 495,866,078

Notes payable (8,587,603) (6,340,961)

Due to related parties 42,970,696 67,352,620

Dividends paid 25 (129,705,882) (129,314,106)

Board members’ remuneration (1,800,000) (1,800,000)

Minority interest (3,003,807) 1,789,032

Net cash (utilized in) generated from financing activities (173,595,438) 427,552,663

Net increase in cash and cash equivalents 67,151,109 71,185,817

Cash and cash equivalents at beginning of year 155,310,007 118,885,180

Foreign currency translation reserve (25,140,580) (34,760,990)

Cash and cash equivalents at end of year 4 197,320,536 155,310,007

Supplemental non-cash information:

Provision for zakat and income tax charged to shareholders’ equity 16 29,932,500 31,177,354

Effect of acquisition transaction with minority interest without change in control 14,338,537 -

Changes in minority interest (14,338,537) -

Changes in fair value of cash flow hedges 84,240 6,076,395



52

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53

Notes to the consolidated financial statements for the year ended December 31, 2013

(All amounts in Saudi Riyals unless otherwise stated)

Astra Industrial Group Company (the “Company”) and its subsidiaries (collectively the “Group”) consist of the Company and its various Saudi Arabian and foreign subsidiaries listed below. The Company’s main objectives include establishment, management, operating and investment in industrial entities (subject to obtaining the Saudi Arabian General Investment Authority (“SAGIA”) approval for each project to be established).

The Company is a Saudi Joint Stock Company licensed under foreign investment license No. 030114989-01 issued in Riyadh by SAGIA and operating under commercial registration No. 1010069607 issued in Riyadh on 9 Muharram 1409H (August 22, 1988). The registered address of the Company is P.O. Box 1560, Riyadh 11441, Kingdom of Saudi Arabia. The shares of Astra Industrial Group Company were listed on the Saudi Stock Market (“Tadawul”) on 17 Shabaan 1429H (August 18, 2008) through subscription of 30% of the Company’s shares by the public.

The accompanying consolidated financial statements include the accounts of the Company and its following subsidiaries, operating under individual commercial registrations:

1 - General Information

Country of incorporation Direct Indirect

Tabuk Pharmaceutical Manufacturing Company (“TPMC”). This company has the following subsidiaries:

Saudi Arabia 95 5

- Tabuk Pharmaceutical Research Company Jordan 100 -

- Tabuk Pharmaceutical Company Limited Sudan 100 -

- Al Bareq Pharmaceutical Manufacturing Factory Company Limited* Saudi Arabia 95 -

- Tabuk Pharmaceutical Manufacturing Company Egypt 100 -

Astra Polymer Compounding Company Limited (“Polymer”). This company has the following fully owned subsidiary:

Saudi Arabia 95 5

- Constab Middle East Polimer A.S. (“CMEP”) Turkey 100 -

- Astra Specialty Compounds India Private Limited India 100 -

International Building Systems Factory Company Limited (“IBSF”) Saudi Arabia 95 5

- Astra Heavy Industries Factory Limited (“AHI”)** Saudi Arabia 95 -

Name of subsidiary

Effective ownership % at December 31, 2013

54

*The remaining 5% interest in this company is owned by Astra Industrial Group Company.**The remaining 5% interest in this company in owned by AstraChem.***During 2013, the share capital of Astra Nova - Turkey was increased through contribution by AstraChem only without the reaming shareholders in Astra Nova - Turkey, which resulted in an increase in AstraChem’s shareholding percentage in Astra Nova, Turkey from 67% to 92.4% and a dilution in the minority interest which was recorded directly through equity under “effect of acquisition transaction with minority interest without change in control”.

Effective ownership % at December 31, 2013



F Country of incorporation Direct Indirect

Astra Industrial Complex Co. Ltd. for Fertilizer and Agrochemicals (“AstraChem”). This company has the following foreign subsidiaries:

Saudi Arabia 95 5

- AstraChem Saudia Algeria 100 -

- AstraChem Morocco Morocco 100 -

- Aggis International Limited British Virgin Islands 100 -

- AstraChem Turkey Turkey 100 -

- AstraChem Syria Syria 100 -

- AstraChem Tashqand Uzbekistan 100 -

- Astra Industrial Complex Co. Ltd. for Fertilizer and Agrochemicals, Jordan Jordan 50 -

- Astra Nova, Turkey *** Turkey 92.4 -

- AstraChem Ukraine Ltd. Ukraine 100 -

- AstraChem Saudi Jordan Co. Egypt 100 -

- Astra Agricultural Saudi Jordan Co. Egypt 100 -

- Astra Industrial Complex for Fertilizers and Agrochemicals and Investments Oman 99 -

Al-Tanmiya Company for Steel Manufacturing. The company has the following fully owned subsidiary:

Jordan 51 -

- Al Inma’a Company Iraq 100 -

Astra Energy LLC Jordan 76 -

Astra Mining Company Limited Saudi Arabia 60 -

Name of subsidiary

55

The principal activities of the subsidiaries are as follows: Production, marketing and distribution of medicine

and pharmaceutical products. Production of polymer compounds, plastic additives,

color concentrates and other plastic products. Metal based construction of industrial buildings and

building frames. Production of compounded fertilizers and agriculture

pesticides and the wholesale and retail trading of fertilizers, forages and insecticides. Also, execution of agricultural contracting projects.

Production of steel pallets and rebar and generation of the required power of such activity.

Exploration of all ores and minerals in all regions of the Kingdom of Saudi Arabia except for those land and marine areas beyond the scope of application of the mining investment law specified in Article No. 8 of the law.

The Group has operation in Sudan through its subsidiary namely Tabuk Pharmaceutical Company Limited. As per the information provided by International Monetary Fund, the cumulative three years inflation rate for Sudan exceeded 100% as of December 31, 2013, this, combined with other indicators, resulted Sudan being declared as hyperinflationary economic in the fourth quarter of 2013. Such subsidiary is considered not material to the consolidated financial statements, accordingly its financial statements for the year ended December 31, 2013 are not prepared under International Accounting Standard IAS 29, Financial Reporting in Hyperinflationary Economies.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated.

2 - 1 Basis of preparationThe accompanying consolidated financial statements

have been prepared under the historical cost convention on the accrual basis of accounting, and in compliance with accounting standards promulgated by Saudi Organization for Certified Public Accountants (“SOCPA”).

2 - 2 Critical accounting estimates and judgmentsThe preparation of consolidated financial statements in

conformity with generally accepted accounting principles requires the use of certain critical estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the reporting date and the reported amounts of revenues and expenses during the reporting period. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.

2 - 3 Investments(a) Subsidiaries

Subsidiaries are entities over which the Group has the power to govern the financial and operating policies to obtain economic benefit generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Investments in subsidiaries which are not considered as material to the consolidated financial statements are accounted for using the equity method of accounting and are initially recognized at cost.

The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given or liabilities incurred or assumed at the date of acquisition. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. Goodwill is tested annually for impairment and carried at cost, net of impairment losses, if any.

Where there is a change in the Company’s interest in a subsidiary without resulting in loss of control by the Company, the ownership percentage as of the date of preparation of the consolidated financial statements is used to compute the Company’s share and minority interest share in the subsidiary’s net assets, necessary reconciliations to determine the consolidated net income and the share of minority interests in the subsidiary’s net income, and no profit or loss is recognized as a result of the change in the controlling interest.

Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(b) Associates and unconsolidated subsidiariesAssociates are entities over which the Group has

significant influence, but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates and unconsolidated subsidiaries are accounted for using the equity method of accounting and are initially recognized at cost. The Group’s share of its associates and unconsolidated subsidiaries’ post-acquisition income or losses is recognized in the consolidated income statement and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates.

2 - Summary of significant accounting policies



56

Number of Years

2 - 4 Segment reporting(a) Business segment

A business segment is a group of assets, operations or entities:(i) Engaged in revenue producing activities;(ii) Results of its operations are continuously analyzed

by management in order to make decisions related to resource allocation and performance assessment; and

(iii) Financial information is separately available.

(b) Geographical segment

A geographical segment is a group of assets, operations or entities engaged in revenue producing activities within a particular economic environment that are subject to risks and returns different from those operating in other economic environments.

2 - 5 Foreign currency translation(a) Reporting currency

These consolidated financial statements are presented in Saudi Riyals which is the reporting currency of the Company.

(b) Transactions and balances

Foreign currency transactions are translated into Saudi Riyals using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated income statement.

(c) Group companiesThe results and financial position of foreign subsidiaries and

associates having reporting currencies other than Saudi Riyals are translated into Saudi Riyals as follows:

1. assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

2. income and expenses for each income statement are translated at average exchange rates; and

3. components of the equity accounts are translated at the exchange rates in effect at the dates the related items originated.

Cumulative adjustments resulting from the translations of the financial statements of foreign subsidiaries and associates into Saudi Riyals, if material, are reported as a separate component of equity.

Dividends received from an associate or a subsidiary are translated at the exchange rate in effect at the transaction date and related currency translation differences are realized in the consolidated income statement.

When an investment in a foreign subsidiary and an associate is partially disposed off or sold, currency translation differences that were recorded in equity are recognized in the consolidated income statement as part of gain or loss on disposal or sale.

2 - 6 Cash and cash equivalentsCash and cash equivalents include cash in hand and with banks

and other short-term highly liquid investments with maturities of three months or less from the purchase date.

2 - 7 Murabaha investmentsMurabaha investments are short-term highly liquid

investments with original maturities of three months or more but not more than one year from the purchase date. Commission income is recognized on an accrual basis using agreed commission rates.

2 - 8 Accounts receivableAccounts receivable are carried at original invoice amount

less provision for doubtful debts. A provision against doubtful debts is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Such provisions are charged to the consolidated income statement, and reported under “Selling and marketing expenses”. When account receivable is uncollectible, it is written-off against the provision for doubtful debts. Any subsequent recoveries of amounts previously written-off are credited against “Selling and marketing expenses” in the consolidated income statement.

2 - 9 Accrued revenueAccrued revenue represents revenue earned but not yet billed

at year-end. Such amounts will be billed in the subsequent period. These balances are currently included under accounts receivable.

2 - 10 InventoriesInventories are carried at the lower of cost or net realizable

value. Cost is determined using the weighted average method. The cost of finished products include the cost of raw materials, labor and production overheads.

Net realizable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses.

2 - 11 Property, plant and equipmentProperty, plant and equipment are carried at cost less

accumulated depreciation except projects under construction which is carried at cost. Land is not depreciated. Depreciation is charged to the consolidated income statement, using the straight-line method to allocate the costs of the related assets over the following estimated useful lives:

Buildings 10 - 33

Leasehold improvements 4 - 10

Machinery and equipment 5 - 12.5

Furniture, fixtures and office equipment 3 - 10

Vehicles 4

Computer software 4



57

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in the consolidated income statement.

Maintenance and normal repairs which do not materially extend the estimated useful life of an asset are charged to the consolidated income statement, as and when incurred. Major renewals and improvements, if any, are capitalized and the assets so replaced are retired.

2 - 12 Impairment of non-current assetsNon-current assets are reviewed for impairment whenever

events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount which is the higher of an asset’s fair value less cost to sell and value in use. For the purpose of assessing impairment, assets are grouped at lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-current assets other than intangible assets that suffered impairment are reviewed for possible reversal of impairment at each reporting date. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but the increased carrying amount should not exceed the carrying amount that would have been determined, had no impairment loss been recognized for the assets or cash-generating unit in prior years. A reversal of an impairment loss is recognized as income immediately in the consolidated income statement.

2 - 13 Intangible assetsIntangible assets, apart from goodwill, represent

registration and license fees and are amortized on a straight-line method over a period of 5 years.

2 - 14 BorrowingsBorrowings are recognized at the proceeds received, net

of transaction costs incurred, if any. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of those assets. Other borrowing costs are charged to the consolidated income statement.

2 - 15 End of service benefitsEnd of service benefits required by Saudi Labor and

Workman Law are accrued by the Group and its Saudi subsidiaries and charged to the consolidated income statement. The liability is calculated; at the current value of the vested benefits to which the employee is entitled, should the employee leave at the consolidated balance sheet date. Termination payments are based on employees’ final salaries and allowances and their cumulative years of service, as stated in the laws of Saudi Arabia.

The foreign subsidiaries provide currently for employee termination and other benefits as required under the laws of their respective countries of domicile. There are no funded or unfunded benefit plans established by the foreign subsidiaries.

2 - 16 Accounts payable and accrualsLiabilities are recognized for amounts to be paid for

goods and services received, whether or not billed to the Group.

2 - 17 Zakat and taxesIn accordance with the regulations of the Department

of Zakat and Income Tax (“DZIT”), the Group is subject to zakat attributable to the Saudi shareholders and to income tax attributable to the foreign shareholders. Provisions for zakat and income tax are charged to the equity accounts of the Saudi and the foreign shareholders, respectively. Additional amounts payable, if any, at the finalization of final assessments are accounted for when such amounts are determined. For subsidiaries outside the Kingdom of Saudi Arabia, provision for income tax is computed in accordance with tax regulations as applicable in the respective countries, if required, and charged to the consolidated income statement.

Deferred income taxes are recognized on all major temporary differences between financial income and taxable income during the year in which such differences arise, and are adjusted when related temporary differences are reversed. Deferred income tax assets on carry forward losses are recognized to the extent that it is probable that future taxable income will be available against which such carry-forward tax losses can be utilized. Deferred income taxes are determined using tax rates which have been enacted by the consolidated balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income taxes arising out of such temporary differences were not significant and, accordingly, were not recorded as of December 31, 2013 and 2012.

The Group and its Saudi Arabian subsidiaries withhold taxes on certain transactions with non-resident parties in the Kingdom of Saudi Arabia as required under Saudi Arabian Income Tax Law.

2 - 18 ProvisionsProvisions are recognized when; the Group has a present

legal or constructive obligation as a result of a past event; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated.

2 - 19 Revenue recognitionRevenues are recognized upon delivery of products

and customer acceptance, if any, or on the performance of services. Revenues are shown net of trade or quantity discounts, if any, and after eliminating sales within the Group. Royalty income is recognized on an accrual basis in accordance with the substance of agreements.

Contract revenues are recognized using the percentage of completion method. The percentage of completion is determined by comparison of contract cost incurred to date with the total estimated cost for the contract. Changes in cost estimates and losses on uncompleted contracts, if any, are recognized in the period they are determined.



58

When it is probable that the total contract costs will exceed the total contract revenues, the expected loss is recognized immediately. Costs and estimated earnings in excess of billing, if any, are included in the current assets. However, billing in excess of costs incurred and estimated earnings, if any, are included in current liabilities.

2 - 20 Selling, marketing, general and administrative expensesSelling, marketing, general and administrative expenses

include direct and indirect costs not specifically part of production costs as required under generally accepted accounting principles. Allocations between selling, marketing and general and administrative expenses and cost of revenues, when required, are made on a consistent basis.

2 - 21 Research and development costsResearch and development costs are charged to the

consolidated income statement in the period in which they are incurred.

2 - 22 Operating leasesRental expenses under operating leases are charged to the

consolidated income statement over the period of the respective lease.

2 - 23 DividendsDividends are recorded in the consolidated financial

statements in the period in which they are approved by the shareholders of the Company.

2 - 24 Earnings per shareEarnings per share for the year ended December 31, 2013

and 2012 have been computed by dividing the income from main operations and net income for each year by weighted average number of shares outstanding during such years.

2 - 25 ReclassificationsCertain reclassifications have been made in the comparative

2012 consolidated financial statements to conform to 2013 presentation.

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value and cash flows interest rate risks and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance.

Risk management is carried out by senior management. The most important types of risks are summarized below.

Financial instruments carried on the consolidated balance sheet include cash and cash equivalents, accounts receivable, investments in unconsolidated subsidiaries and associates, murabaha and tawaroq facilities, notes payable and accounts payable. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

Financial asset and liability is offset and net amounts reported

in the consolidated financial statements, when the Group has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and liability simultaneously.3 - 1 Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Group’s transactions are principally in Saudi Riyals, US dollars, Turkish Lyra, Euro, UAE Dirham, Jordanian Dinar, Egyptian Pound and Sudanese Pound.

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. The Group also has investments in foreign subsidiaries and associates, whose net assets are exposed to currency translation risk. Currently, such exposures are mainly related to exchange rate movements between Saudi Riyals against Sudanese Pound, Turkish Lyra, Jordanian Dinar and other. Such exposures are recorded as a separate component of shareholders’ equity in the accompanying consolidated financial statements.

3 - 2 Fair value and cash flows interest rate risksFair value and cash flow interest rate risks are the exposures

to various risks associated with the effect of fluctuations in the prevailing interest rates on the Group’s financial positions and cash flows. The Group’s interest rate risks arise mainly from its murabaha and tawaroq facilities which are at floating rate of interest and are subject to repricing on a regular basis.

3 - 3 Price riskThe risk that the value of a financial instrument will fluctuate

as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded in the market. The Group is currently not exposed to price risk.

3 - 4 Credit riskCredit risk is the risk that one party to a financial instrument

will fail to discharge an obligation and cause the other party to incur a financial loss. Cash is placed with banks with sound credit ratings. Accounts receivable are carried net of provision for doubtful debts.

3 - 5 Liquidity riskLiquidity risk is the risk that an enterprise will encounter

difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at an amount close to its fair value. Liquidity risk is managed by monitoring on a regular basis that sufficient funds are available through committed credit facilities to meet any future commitments.

3 - 6 Fair valueFair value is the amount for which an asset could be exchanged,

or a liability settled between knowledgeable willing parties in an arm’s length transaction. As the Group’s financial instruments are compiled under the historical cost convention, differences can arise between the book values and fair value estimates. Management believes that the fair values of the Group’s financial assets and liabilities are not materially different from their carrying values.

3 - Financial instruments and risk management



59

4 - Cash and cash equivalents

5 - Accounts receivable, net

6 - Inventories, net

7 - Prepayments and other current assets

2013 2012

Cash at banks 195,891,454 151,278,174

Cash in hand 1,429,082 4,031,833

197,320,536 155,310,007

2013 2012

Accounts receivable - trade 979,576,548 750,940,456

Accrued revenue 55,113,991 39,263,106

1,034,690,539 790,203,562

Less: Provision for doubtful debts (28,984,517) (27,751,931)

1,005,706,022 762,451,631

2013 2012

Raw and packing materials 433,717,432 527,229,294

Finished goods 294,278,813 220,563,631

Work-in-process 22,870,222 32,468,031

Goods in transit 3,202,732 13,958,428

Spare parts and consumables (held not for sale) 42,511,634 49,189,589

796,580,833 843,408,973

Less: Provision for obsolete and slow moving inventories (8,402,955) (26,945,703)

788,177,878 816,463,270

2013 2012

Advances to suppliers 130,702,789 106,307,679

Prepaid expenses 49,515,095 37,754,925

Employees› receivables 13,279,274 16,855,506

Refundable deposits and insurance claims 4,967,369 4,890,346

Value added tax 7,149,923 4,887,802

Other 3,091,810 7,027,065

208,706,260 177,723,323



60

8 - Investment in unconsolidated subsidiaries and associates

9 - Related party transactions and balances

2013 2012

Unconsolidated subsidiaries:

Tabuk Poland Limited - Poland 100% 100%

Tabugen France - France 100% 100%

Tabuk Czech s.r.o - Czech Republic 100% 100%

Associates:

Mastra Agricultural Company - Egypt 49% 49%

Astra Agricultural Company Ltd. - Republic of Yemen 49% 49%

Movement of the Group’s share in unconsolidated subsidiaries and associates is as follows:

2013 2012

January 1 1,996,201 1,590,634

Share in net income, net 319,117 405,567

December 31 2,315,318 1,996,201

2013 2012

Sales 21,964,483 18,223,627

Purchases 8,074,010 6,852,580

Finance commission 15,244,088 11,939,921

During the years 2013 and 2012, the Company and its subsidiaries transacted with various related parties. Terms of those billings and charges are similar to commercial transactions with external parties. Following are the details of the major transactions with related parties during the years ended December 31:



Ownership interest

61

Due from related parties comprises of the following as of December 31:

2013 2012

Zenith Pharma 21,755,368 9,219,117

Al-Kendi Factory - Algeria 17,859,744 25,076,479

United Pharmaceutical Manufacturing Company 9,117,999 9,131,510

Munir Sukhtian Group - Jordan 6,327,049 3,435,939

Astra Agricultural Company Ltd. - Republic of Yemen 1,917,730 5,466,005

Societe Tabuk Algeri (E.U.R.L) 1,570,410 1,570,410

Other 2,121,451 1,208,965

60,669,751 55,108,425

Due to related parties comprises of the following as of December 31:

2013 2012

Arab Supply and Trading Company 37,014,052 -

Tharawat Mining Company 4,349,018 1,318,033

Nour Communications Company 1,588,322 436,365

Other 433,334 1,014,289

43,384,726 2,768,687

Non-current amounts above represent long-term loans from the minority shareholders in Al-Tanmiya Company for Steel Manufacturing and Astra Energy Company (subsidiaries), to finance the construction of the steel factory and a power station. These balances are not scheduled for repayment during next twelve month.



Current:

Non-current: 2013 2012

Al Maseera International Company 288,602,981 244,886,136

Mr. Ali Shamara 40,503,851 41,250,000

329,106,832 286,136,136

62

10 -

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63



11 - Goodwill

12 - Intangible assets, net

2013 2012

January 1 44,054,811 44,054,811

Additions - -

December 31 44,054,811 44,054,811

Impairment test for goodwillThe recoverable amount of goodwill is determined based on fair value calculations. These calculations use cash

flow projections based on financial budgets approved by management covering a five year period.

The key assumptions used for fair value calculations are as follows:

1 Budgeted gross margin.

2 Weighted average growth rate

3 Discount rate applied to the cash flow projections.

Management determined budgeted gross margin and weighted average growth rates based on past performance and its expectations of market development. The discount rates used are pre-zakat and pre-income tax reflect specific risks relating to the industry. The results of impairment test at December 31, 2013 indicated no impairment charge.

2013 2012

Cost:

January 1 20,637,607 4,234,354

Additions 3,739,769 17,353,763

Disposals (152,102) (950,510)

December 31 24,225,274 20,637,607

Accumulated amortization:

January 1 5,433,726 1,157,199

Charge for the year 6,054,029 4,276,527

December 31 11,487,755 5,433,726

Net book value:

December 31 12,737,519 15,203,881

64



13 - Murabaha and tawaroq facilities

14 - Notes payable

15 - Accrued and other current liabilities

The Group has bank facilities agreements in the form of murabaha, short-term tawaroq and other loans with local and foreign banks to finance the Group companies’ ongoing funding needs of which approximately Saudi Riyals 1,119 million was utilized as of December 31, 2013 (2012: approximately Saudi Riyals 1,214 million) for murabaha, tawaroq and other facilities. The loans bear commission charges at prevailing market rates. These facilities are secured by corporate guarantees. The facilities agreements also contain covenants requiring maintenance of certain financial ratios and other matters. The carrying values of the murabaha and tawaroq facilities at December 31, 2013 are denominated in Saudi Riyals, except amounts of approximately Saudi Riyals 76.14 million (2012: Saudi Riyals 71.10 million) which are denominated in foreign currencies.

2013 2012

Accrued expenses 68,759,577 71,453,809

Employees’ benefits 30,399,661 24,553,410

Employees’ bonus and incentives 30,133,186 23,417,298

Contractor retentions 20,126,915 9,808,204

Sales commission 17,986,063 21,207,002

Operational costs 17,114,544 6,951,242

Advances from customers 9,632,697 5,629,744

Professional fees 838,150 1,333,689

Other 3,284,476 3,914,322

198,275,269 168,268,720

At December 31, 2013, the Group was liable to various vendors for interest-free notes payable issued in the normal course of business amounting to Saudi Riyals 8,995,041 (2012: Saudi Riyals 17,582,644).

65



16 - Provision for zakat and income tax

16 - 1 Components of zakat baseThe Group’s Saudi Arabian subsidiaries file separate zakat and income tax declarations on an unconsolidated

basis. The significant components of the zakat base of each company under zakat and income tax regulation are principally comprised of equity, provisions at the beginning of year and estimated taxable income, less deductions for the net book value of property, plant and equipment, investments and certain other items.

16 - 2 Provision for zakat and income tax

Movement for the year ended December 31, 2013:

Zakat Income tax Total

January 1 29,090,918 1,441,595 30,532,513

Provision for the year 19,424,914 10,507,586 29,932,500

Payments (17,796,348) (7,775,395) (25,571,743)

December 31 30,719,484 4,173,786 34,893,270

January 1 29,309,459 5,981,479 35,290,938

Provision for the year 23,783,913 7,393,441 31,177,354

Payments (24,002,454) (11,933,325) (35,935,779)

December 31 29,090,918 1,441,595 30,532,513

Movement for the year ended December 31, 2012:

16 - 3 Status of final assessments

The Company and its subsidiaries filed zakat/income tax returns for the years through December 31, 2012. The following are the final zakat and income tax assessments of the Company and its subsidiaries that have been agreed with the DZIT as of December 31, 2013:

Name of subsidiary/company Final zakat/ income tax assessments up to

Astra Industrial Group Company 2004

Tabuk Pharmaceutical Manufacturing Company 2002

Astra Polymer Compounding Company Limited 2002

International Building Systems Factory Company Limited 2002

Astra Industrial Complex Ltd. for Fertilizers and Agrochemicals 2004

Astra Mining Company Limited Not yet issued

Al Bareq Pharmaceutical Manufacturing Factory Company Not yet issued

Astra Heavy Industries Factory Company Limited Not yet issued

66

17 - End of service benefits

18 - Share capital

19 - Statutory reserve



The share capital of the Company as of December 31 was comprised of 74,117,647 shares stated at Saudi Riyals 10 per share owned as follows:

2013 2012

Saudi founding shareholders 57.63% 58.89%

Non-Saudi founding shareholders 11.11% 11.11%

Public 31.26% 30.00%

100.00% 100.00%

In accordance with the Regulations for Companies in Saudi Arabia and the Company’s By-laws, the Company has established a statutory reserve by the appropriation of 10% of net income until the reserve equals at least 50% of the share capital. The statutory reserve in the accompanying consolidated financial statements is the statutory reserve of the Company. This reserve is not available for dividend distribution.

2013 2012

January 1 64,196,557 57,852,070

Provisions 22,012,467 10,946,800

Payments (10,405,639) (4,602,313)

December 31 75,803,385 64,196,557

Shareholding

Shareholders

67

20 - Selling and marketing expenses

21 - General and administrative expenses



2013 2012

Employees› salaries, bonus and other benefits 104,988,600 100,400,540

Professional fees 22,081,962 29,432,948

Travel and transportation 14,682,359 18,053,406

Depreciation 7,841,217 6,289,833

Rent 5,863,872 6,642,400

Insurance 4,936,975 2,074,395

Utilities 3,886,197 4,490,911

Amortization 1,684,688 375,711

Maintenance 1,391,183 2,956,243

Communications and office expenses 1,219,777 2,231,596

Other 18,663,664 12,754,508

187,240,494 185,702,491

2013 2012

Employees› salaries, bonus and other benefits 149,080,847 119,660,171

Marketing, advertising and promotions 78,263,655 57,042,014

Distribution charges 24,723,043 12,627,045

Provision for doubtful debts 9,911,543 8,232,169

Travel and transportation 8,759,337 9,506,282

Expired and damaged inventory 5,809,291 3,126,269

Rent 5,445,798 6,477,675

Registration 4,361,488 2,514,774

Depreciation 3,444,929 2,835,193

Utilities 2,365,047 1,723,134

Other 13,516,604 12,888,142

305,681,582 236,632,868

68



22 - Other income, net

23 - Earnings per share

24 - Segment information

2013 2012

Toll manufacturing fee 40,210,699 28,940,554

Investment income 11,463,038 5,343,241

Income on murabaha investments 3,213,382 11,865,816

Sale of scraped items 2,800,851 1,939,477

Royalty income 1,965,582 3,217,811

Other, net 2,664,780 (2,201,691)

62,318,332 49,105,208

Earnings per share for the years ended December 31, 2013 and 2012 have been computed by dividing the income from main operations and net income for each year by weighted average number of shares outstanding during such years.

The Group operates principally in the following major business segments:

A - Pharmaceuticals; B - Specialty Chemicals;C - Steel Industries; andD - Holding Company and other

69



Selected financial information as of December 31, 2013 and 2012 and for the years then ended summarized by the above business segments was as follows:

2012

Sales and projects:

- Local 438,483,133 370,954,354 231,925,858 - 1,041,363,345

- Export 217,461,935 175,879,653 61,624,322 - 454,965,910

- Total 655,945,068 546,834,007 293,550,180 - 1,496,329,255

Gross profit 407,318,177 147,621,270 62,986,534 - 617,925,981

Income (loss) from main operations 149,500,068 67,953,018 (8,358,834) (23,873,171) 185,221,081

Income (loss) before minority interest 172,147,061 60,465,598 (8,052,036) (10,923,064) 213,637,559

Depreciation 14,841,388 13,279,299 6,799,877 1,352,658 36,273,222

Amortization 375,711 338,665 - 3,562,151 4,276,527

Property, plant and equipment, net 180,991,036 156,130,008 805,013,893 4,654,363 1,146,789,300

Capital expenditures 41,435,956 77,139,332 47,434,314 1,380,622 167,390,224

2013 Pharmaceuticals Specialty Chemicals

Power and Steel Industries

Holding Company and other Total

Sales and projects:

- Local 577,315,852 384,989,140 307,282,014 - 1,269,587,006

- Export 290,701,646 168,155,483 42,982,205 - 501,839,334

- Total 868,017,498 553,144,623 350,264,219 - 1,771,426,340

Gross profit 517,838,811 139,061,788 26,906,060 - 683,806,659

Income (loss) from main operations 184,732,146 48,493,780 (35,427,527) (20,761,766) 177,036,633

Income (loss) before minority interest 216,132,801 35,159,217 (36,890,626) (3,044,184) 211,357,208

Depreciation 13,666,334 15,726,014 21,826,013 1,409,124 52,627,485

Amortization 446,124 906,115 - 4,701,790 6,054,029

Property, plant and equipment, net 314,195,949 149,049,103 851,069,029 11,514,506 1,325,828,587

Capital expenditures 144,209,478 12,887,414 70,604,353 8,465,322 236,166,567

70



The Group’s operations are conducted principally in Saudi Arabia, in addition to Iraq and other countries. Selected financial information as of December 31 and for the years then ended summarized by geographic area, was as follows:

More than 70% of the Group’s export sales are in the Middle East and North African (MENA) region.

Property, plant and equipment in Iraq is owned by the Group through its two subsidiaries, Al Inma’a Company and Astra Energy LLC., in which it holds 51% and 76% interest.

The General Assembly of the shareholders approved in its meeting held on 13 Jumada’ II 1434 H (April 23, 2013) the Company’s Board of Directors’ recommendation to distribute cash dividends amounting to Saudi Riyals 129,705,882 for the year ended December 31, 2012 of Saudi Riyals 1.75 for each outstanding share, which are fully paid during the period ended June 30, 2013.

At December 31, 2013, the Group had contingent liabilities arising in the normal course of business, in respect of letters of guarantee, amounting to Saudi Riyals 110.61 million (2012: Saudi Riyals 115.56 million) and letters of credit amounting to Saudi Riyals 56.13 million (2012: Saudi Riyals 64.04 million).The Group in the normal course of business has entered into arrangements with suppliers for the purchase of machines and equipment and other services. The capital commitments at December 31, 2013 are amounting to Saudi Riyals 25.42 million (2012: Saudi Riyals 52.46 million).

2013 Saudi Arabia Iraq Other countries Total

Property, plant and equipment 465,413,738 754,720,281 105,694,568 1,325,828,587

2012 Saudi Arabia Iraq Other countries Total

Property, plant and equipment 372,696,481 718,194,196 55,898,623 1,146,789,300

25 - Dividends

26 - Contingencies and commitments

72



P.O. Box: 1560 Riyadh 11441 Kingdom Saudi ArabiaTel: + 966114752002Fax: + 966114752001Info@astraindustries.com.sawww.astraindustries.com.sa

P.O. Box: 30740 Riyadh 31952 Kingdom Saudi ArabiaTel: + 966318121232Fax: + [email protected]


P.O. Box: 1560 Riyadh 11441 Kingdom Saudi ArabiaTel: + 966114752002Fax: + 966114752001



P.O. Box: 925769 Riyadh 11190Tel: + 96265692976Fax: + [email protected]

www.astraindustries.com.sa

P.O. Box: 1560 Riyadh 11441Kingdom Saudi Arabia

Tel: + 966 11 4752002 - Fax: + 966 11 4752001

[email protected]

يونسلا ريرقتلا 2013 - astra industrial · fax: + 966 11 4752001...

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